— This is the script of CNBC's news report for China's CCTV on April 23, Monday.
It's a matter with close attention that how and when to introduce the supervision. The companies will adjust strategies and even the whole industry will be shuffled according to the new regulations. Currently, U.S. doesn't publish the specific regulatory policy while the Europe has already showed signs. Let's have a look of the potential effect from the<General Data Protection Regulation> that EU is about to implement from May 25th.
In the past, EU defines the privacy information as name, photo, email, cell number, address or ID number. However, the latest regulation expand the definition, including "Confirmed" and "Identifiable" data which means the personal data has a broad content, like address data, mobile device identity and server address under specific circumstance, etc. and the regulation give consumers more control.
The consumer has right to know what personal data the company has stored and what that data is used for. And consumers will also get the right to be "forgotten", meaning consumer can ask the platform delete their personal data. Additionally, Regulation has strict requirements to companies, once data leakage happens, companies must report it to data protection regulator within 72 hours.
If companies offend the regulation, they will be subject to severe penalties of up to 20 million euros, or 4% of the global annual turnover in the previous year. Between the two, take the higher one as standard. Facebook has hundreds of billions USD revenue per year while Google has thousands of billions of that. It would be a huge suffers for the tech giants if they break the regulation. The latest regulation published by the EU is called as the "strictest regulations for personal data in the history", actually it was introduced 2 years ago, and the corporations have been preparing for it take into effect during the last 2 years
For example, Facebook introduced a new privacy tool to meet the new regulation and revised the terms of service – 1.5 billion subjects of terms of service who from Africa, Asia, Australia and South America now under the U.S. company control, which means these users will not under the protection of new data security regulations as Europe users and this approach also minimizes the regulatory risk of Facebook.
Barclays Bank recently said in a report that from the 2nd quarter of this year, the growth rate of active users under the influence of data security scandal will show a decline on Facebook, Twitter and other social platform. But the weak growth of user will affect ads. So many platforms concern the "customized ads products".
As an old saying goes "You may know by a handful the wholes sack", and the market also think so, some people warn that EU's position to data security means it's just a start for more comprehensive regulations to tech companies. If other countries also follow this trend, like the U.S., then the 1.5 billion users that transferred by Facebook will under the regulation of new policy which will affect tech giants' long-term profit and growth of global digital economy. While the regulatory trend has become a high-probability event, how does tech giants avoid violating regulations and how to find other profit growth points will become the next problem that Silicon Valley needs to solve.